9 Excellent Tax Deductions for Homeowners

Whether you are a new homeowner or you are preparing to buy your first home, you may be eager to take advantage of the tax breaks that you have been hearing about. One of the great benefits of homeownership is the ability to write off numerous expenses. While your home insurance premium is not one of these expenses, there are others that you should be aware of before you file your next tax return.

1. Mortgage Points
Did you pay discount points or mortgage points when you purchased your home? These points are fully deductible for the tax year that you purchased your home.

2. Mortgage Interest
Each year that you own your home, you are permitted to deduct the full amount of mortgage interest that you paid during that calendar year.

3. Property Taxes
All states have a property tax, so this deduction applies to all homeowners. There is a cap on how much you can deduct, so review the rules carefully before you proceed.

4. Rental Expenses
Do you get income by renting out a portion of the home? All related expenses for that portion of the home may be deducted. These expenses include insurance, maintenance costs, utilities and more.

5. Home Office Use
Likewise, you may deduct similar expenses if you use an area of your home exclusively for business purposes. Keep in mind that you must keep excellent records to deduct these expenses for a home office or rental deduction.

6. Home Improvements
From a new roof to a water heater replacement and more, you will undoubtedly make many upgrades and improvements to your home over the years. Keep track of these expenses because they can be deducted in the tax year of the sale of your home.

7. Energy Efficient Upgrades
Expenses related to the installation of solar panels, wind systems and more could qualify you for a tax credit. Ensure that you understand the requirements and qualifications before you make the upgrade so that you can optimize the tax credit.

8. Medical Home Improvements
Have you retrofitted or altered your home for medical reasons? Expenses for installing handrails, ramps and more may be tax deductible with special applicable rules.

9. Capital Gains Exclusion
Typically, when you sell an asset, you are required to pay a capital gains tax. However, if you meet the qualifications, you may be able to avoid this tax and pocket a profit from the sale of your home down the road.

Are you ready to learn more about the benefits of homeownership? Contact a loan originator at MortgageDepot today for assistance.

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